Climate Change Data

Environmental Metrics

ESG Focus Areas

• Safety Production
• Product Quality Assurance
• Employee Well-being
• Environmental Protection
• Science and Technology Innovation
• Anti-corruption
• Community Investment

Environmental Achievements

• Total investment in environmental protection was approximately RMB 219 million.
• Successfully passed the supervision and reviewing of ISO.
• Outperformed the environmental protection target of the local government during the year.

Social Achievements

• Provided over 232 direct jobs.
• Completed all levels of education training for 31,658 staffers.
• No product quality incident of general or above level or material quality complaint.
• No safety incident of general or above level and no work-related death accidents.

Governance Achievements

• Established a comprehensive corporate governance structure including the general meeting, the Board of Directors, the supervisory committee, and the management.
• Successfully passed the national emergency Response Department of the national dual prevention system construction pilot unit acceptance.
• Strengthened discipline inspection and focused on the primary responsibility of supervision.

Climate Goals & Targets

Environmental Challenges

• Soaring prices in raw materials and freight rates, significant RMB appreciation, and sluggish market demands.

Mitigation Strategies

• Promptly adjusting its strategies and taking an active approach to forge ahead.

Supply Chain Management

Responsible Procurement

• Regular audits on suppliers (including on-site audit, paper audit)
• Quality agreements
• Questionnaires

Climate-Related Risks & Opportunities

Physical Risks

• Extreme abnormal weather

Reporting Standards

Frameworks Used: Shenzhen Stock Exchange Guidelines on Normative Operation of Listed Companies on the Main Board, Environmental, Social and Governance Reporting Guide (issued by Hong Kong Stock Exchange), Guidelines to Chinese State-owned Enterprises on Fulfilling Corporate Social Responsibilities (issued by SASAC)

Certifications: ISO 9001, ISO 14001, ISO 10012, GMP accreditation, US FDA accreditation (18 products), COS Certificate from EDQM (11 products), HACCP accreditation

Awards & Recognition

• Major Scientific and Technological Achievement Award of Zibo City
• Top 100 Award-winning Enterprises of China Pharmaceutical Industry
• Model Enterprise of Integrity Construction of Shandong Province
• Top 100 Comprehensive Enterprises of Zibo City in 2021
• Outstanding Contribution to Industrial Climbing of Zibo City
• Leading Enterprise of Science and Technology of Shandong Province in 2021
• Outstanding Contribution to Scientific and Technological Innovation of Zibo City
• Enterprised with Outstanding Contribution to Quality in Zibo City
• Contribution Award for the Development of University-Industry Research Cooperation of College of Pharmacy of Shandong University
• 2021 Shandong Province “Quality Lu Medicine” Construction Demonstration Enterprise
• 2021-2023 Shandong Province Demonstration Unit (Base) for the Integration of Industry and Education
• 2021 Top 100 Industrial Enterprises of Zibo City
• Two integration of outstanding enterprises of Shandong Province

Environmental Metrics

ESG Focus Areas

• Environmental protection
• Employee care
• Social contribution
• Corporate governance
• Responsible procurement
• R&D and innovation
• Product quality and safety
• Supply chain management
• Climate change
• Anti-corruption

Environmental Achievements

• Invested CNY 146 million in environmental protection in 2022, including wastewater treatment, environmental protection measures, and hazardous waste disposal.
• Completed various environmental protection projects, resulting in standard emission of waste gas, wastewater, and waste residues.
• Achieved annual emission reduction goals and improved environmental management performance.
• Reduced carbon emissions (Scope I and II) to 258,465 tCO2e in 2022.

Social Achievements

• 100% labor contract signing rate.
• No major quality complaints or quality incidents.
• Organized over 60 volunteer service activities with 1,000+ participants.
• Provided training hours totaling 155,963 hours for 6,781 employees.
• Implemented a “Four Eagles” growth system for talent cultivation.

Governance Achievements

• Established a comprehensive corporate governance structure including the Shareholders meeting, the Board of Directors, the Board of Supervisors, and the management.
• Held 2 Shareholders meetings, 9 board meetings, and 6 meetings of the Board of Supervisors during the reporting period.
• Implemented a multi-layer risk prevention and control system.
• No reports of corruption lawsuits against the Company or its employees.

Climate Goals & Targets

Environmental Challenges

• Raw material supply and shipment challenges.
• Climate-related risks such as typhoons, storms, heavy rainfall, sandstorms, and high temperatures, potentially leading to water and power outages, road outages, equipment losses, forced outages, and supply chain disruptions.
• Growing environmental protection costs and stricter environmental regulations.

Mitigation Strategies

• Developed an Emergency Plan for Extreme Abnormal Weather and conducted annual emergency drills.
• Connected to the weather forecast network of Zibo Meteorological Department for early warning.
• Increased investment in environmental protection and upgraded environmental protection facilities.
• Implemented targeted environmental protection measures based on industry characteristics.
• Monitored key pollution discharge points and reduced environmental risks.
• Reasonably arranged inventory and procurement cycles to reduce market risks.
• Actively organized product technology research to reduce product costs.

Supply Chain Management

Supplier Audits: 198 suppliers conducted ESG impact assessments in 2022

Responsible Procurement

• Supplier Code of Conduct
• Supplier Audit Plan
• Material Classification and Supplier Management Standards
• Contract Management Measures

Climate-Related Risks & Opportunities

Physical Risks

• Typhoons, storms, heavy rainfall, sandstorms, and high temperatures

Transition Risks

• Stricter environmental regulations and growing environmental protection costs

Reporting Standards

Frameworks Used: Environmental, Social and Governance Reporting Guide (Appendix 27 of the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited), Shenzhen Stock Exchange Guidelines on Normative Operation of Listed Companies on the Main Board, Guidelines to Chinese State-owned Enterprises on Fulfilling Corporate Social Responsibilities

Certifications: ISO9001, ISO14001, ISO10012, GMP, FDA certifications (18 products), COS certificates (12 products), HACCP-based Food Safety System certification

Awards & Recognition

• National Green Supply Chain Management Enterprises
• Shandong Province Archives Business Construction Demonstration Unit
• Demonstration Enterprise of Integrity Construction
• National Environment-Friendly Enterprise
• Excellent Preparation Export Enterprise Brand
• Excellent API Export Enterprise Brand
• Shandong Province High-end Brand Cultivation Enterprise

Environmental Metrics

Environmental Achievements

• Modern Pharmaceutical International Cooperation Centre successfully passed EU audit and obtained EU GMP certificate. 2 products obtained EU CEP certificate and 9 products completed DMF registration. The Company was awarded A class enterprise of veterinary medicine in Shandong province. The Company was the first company in the national chemical pharmaceutical industry awarded the title of “Model Enterprises of Green Supply Chain Management”, and was awarded the Two integration of outstanding enterprises of Shandong Province in 2021.

Social Achievements

• The Company formulated and implemented staff education and training plan in 2022. In the first half of 2022, 36 company-level training programs were carried out, with 1,271 employees attended the training, including special training for new employees, youth workers safety skills and knowledge improvement training, training of professional environmental protection knowledge, production equipment and special facilities training, technical quality management training, information security, trainer training and other aspects.

Governance Achievements

• The Board confirmed that the Company was in compliance with the Corporate Governance Code (the “Code”) and has not deviated from the Code during the Reporting Period.

Climate Goals & Targets

Environmental Challenges

• the pandemic, fluctuations in the international market, rising raw material prices and intensified market competition
• Affected by the international situation and the pandemic, the raw material medicine products of the Group will encounter more fierce market competition in the second half of the year.
• Risks associated with industry policy changes
• Risks associated with research and development (“R&D”) of new drugs
• Risk associated with lower price
• Risk associated with supply and price fluctuation of raw materials
• Environmental risk

Mitigation Strategies

• The Group will pay close attention to and study relevant industry policies to catch up with the changing trends of the industry on a timely basis, in order to regulate its production and management, strengthen its core competitiveness and actively respond to industry policy changes.
• The Group will further optimise the innovative R&D system by introducing and cultivating high-end talents, continuously improving the R&D level, optimising the R&D structure with the focus placed on promoting the research and development of key products under research. Meanwhile, the Group will strengthen the secondary development of key products, improve the craftsmanship level and reduce production costs, thereby enhancing the competitiveness of products.
• Firstly, the Group will pay close attention to the development of the tenders to flexibly respond to it and adjust the tender plan. Secondly, the Group will conduct clinical studies on some of the key products after their launch on the market to strengthen their market competitiveness. Thirdly, the Group will continue to innovate and develop drugs of urgent clinical need with high added value, further develop the product under production with market potential, and optimise the layout of products to ensure the substantiality of the Company.
• On the one hand, the Group will strengthen monitoring and analysis of the market, reasonably arrange inventory and procurement cycle to reduce risks. On the other hand, the Group will make proactive efforts to realise technology breakthroughs and effective cost reduction.
• The Group has always been in strict compliance with the requirements of national environmental policies and regulations, and will continue to increase investment in environmental protection and promote the upgrading and transformation of environmental protection facilities. The Group actively carries out safety and environmental protection training and education, strengthen internal control standards, strengthen the monitoring of key sewage discharge points, reduce the environmental risks, and match the emissions policy.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: CASBE

Awards & Recognition

• Model Enterprises of Green Supply Chain Management
• Two integration of outstanding enterprises of Shandong Province

Environmental Metrics

ESG Focus Areas

• Corporate governance
• Environmental management
• Employee relations
• Social responsibility
• Product quality and safety
• Supply chain management
• Research and development

Environmental Achievements

• Total investment in environmental protection: RMB 11,900,000
• Reduced biohazardous waste in Workshop 105 by over 80%
• Reduced wastewater emission by 600 tons per year in Workshop 203
• Reduced energy consumption by 40% in No. 2 Branch sewage treatment facility
• Achieved zero defects in FDA and MHRA inspections

Social Achievements

• Launched a “One-day Donation” activity, raising RMB 231,529 for the Municipal Charity Federation
• Recruited three new Taishan industry-leading talents
• Awarded the title of “Top Ten Workers’ Trusted Home in Zibo City”
• Organized the 80th-anniversary variety show, attracting over 1.6 million online viewers
• Provided assistance to 334 employees facing difficulties, with a total fund of RMB 521,200

Governance Achievements

• Established a comprehensive corporate governance structure
• Held seven board meetings and six Supervisory Committee meetings
• Disclosed a total of 86 A-share announcements and 91 H-share announcements
• Passed ISO 9001 recertification audit and ISO 14001 reassessment audit
• Audit and Legal Department awarded the title of “National Advanced Collective of Internal Auditing from 2020 to 2022”

Climate Goals & Targets

Environmental Challenges

• Climate change related risks: extreme weather events impacting production and supply chain
• Environmental regulations and costs
• Market risks affecting raw material supply and prices
• Potential for supply chain disruptions

Mitigation Strategies

• Developed an Emergency Plan for Extreme Abnormal Weather
• Increased investment in environmental protection and facility upgrades
• Implemented safety and environmental protection training
• Monitored key pollution discharge points to achieve standard emissions
• Monitored and analyzed the market to manage inventory and procurement cycles

Supply Chain Management

Supplier Audits: Annual audits; on-site, paper, and online audits

Responsible Procurement

• Supplier Code of Conduct
• ESG impact assessments
• Quality agreements
• Integrity Two-Way Commitment

Climate-Related Risks & Opportunities

Physical Risks

• Typhoons, storms, heavy rainfall, sandstorms, high temperatures

Transition Risks

• Environmental regulations and costs
• Market risks affecting raw material supply and prices

Reporting Standards

Frameworks Used: SEHK Environmental, Social, and Governance Reporting Guide, Shenzhen Stock Exchange Guidelines

Certifications: ISO 9001, ISO 14001

Awards & Recognition

• Benchmarking Enterprise of Intelligent Manufacturing in Shandong Province
• National Intelligent Manufacturing Demonstration Factories
• Zibo City Trade Secret Protection Model Enterprise
• Top Ten Workers’ Trusted Home in Zibo City

Environmental Metrics

ESG Focus Areas

• Not disclosed

Environmental Achievements

• No. 2 factory passed the FDA site audit with zero defects and successfully passed on-site audits by Brazil and that of the Health Department of Canada.
• Initiated the dual carbon strategy implementation plan.
• In the first half of 2024, the Group invested RMB10,434,5400 in environmental protection and paid RMB111,600 in environmental protection tax.

Social Achievements

• In the first half of 2024, 46 company-level training programs were carried out, with 2,321 employees attended the training, including Xinhua Lecture Hall series training courses, youth workers safety skills and knowledge improvement training, training of professional environmental protection knowledge, training of professional quality knowledge, production equipment and special facilities training and other aspects.
• One of our staff has been approved to receive special subsidies from the State Council, three staff have been recognized as leading talents in the industry of Taishan, Shandong and two staff have been named as chief technicians in Shandong, and the Company was honored as a talent-leading enterprise in Shandong Province.

Governance Achievements

• The Directors confirmed that the Company was in compliance with the Corporate Governance Code (the “Code”) and has not deviated from the Code during the Reporting Period.
• The Company has established an audit committee under the Board in accordance with Rule 3.21 of the Listing Rules.
• During the Reporting Period, there are no material matters relating to share schemes mentioned in Chapter 17 of the Listing Rules that were reviewed and/or approved by the Remuneration Committee and the Company did not have matters relating to any grants of options or awards to the Directors or Senior Management of the Company as set out in Rule 17.03(F) and Rules 17.06B(7) and (8) of the Listing Rules.

Climate Goals & Targets

Environmental Challenges

• Sustained sluggish market demand and intense competition.
• Risks associated with industry policy changes (adjustments to the Medical Insurance Catalogue, the promotion of Consistency Evaluation and lowering of the bid price).
• Risks associated with research and development of new drugs (uncertain approvals and market sales).
• Risk associated with lower price (downward pressure on drug prices due to tenders and industry policies).
• Risk associated with supply and price fluctuation of raw materials.
• Environmental risk (sewage, wasted gas and wasted residue generated during production).

Mitigation Strategies

• Actively addressing unfavorable factors and accelerating transformation and upgrading efforts to cultivate core competitiveness.
• Paying close attention to and studying relevant industry policies to catch up with the changing trends of the industry on a timely basis, in order to regulate its production and management, strengthen its core competitiveness and actively respond to industry policy changes.
• Further optimising the innovative R&D system by introducing and cultivating high-end talents, continuously improving the R&D level, optimising the R&D structure with the focus placed on promoting the research and development of key products under research. Meanwhile, the Group will strengthen the secondary development of key products, improve the craftsmanship level and reduce production costs, thereby enhancing the competitiveness of products.
• Strengthening monitoring and analysis of the market, reasonably arranging inventory and procurement cycle to reduce risks. On the other hand, the Group will make proactive efforts to realise technology breakthroughs and effective cost reduction.
• Continuously increasing investment in environmental protection and promoting the upgrading and transformation of environmental protection facilities. Actively carrying out safety and environmental protection training and education, strengthen internal control standards, strengthen the monitoring of key sewage discharge points, reduce the environmental risks, and match the emissions policy.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: CASBE

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Our Ibuprofen bulk drug has been listed as the single-category winner in the eighth batch participants in the national manufacturing industry.
• Our project titled “High-quality Ibuprofen Preparation and Large-scale Production Project Based on Industrial Basic Technology Innovation” won the first prize for technological progress in Shandong Province.
• Our Company has also been designated as Shandong Engineering Research Center for Neurodegenerative Diseases.
• Our Company was appraised as a national-level intellectual property priority enterprise and selected for inclusion in the Shandong Patent Industrialization Enterprise Cultivation Model Library.